- Medicare Part D is Medicare’s prescription drug coverage.
- You may purchase a Medicare Part D plan if you qualify for Medicare.
- Part D plans have a list of drugs they cover called a formulary, so you can tell if a plan covers your prescriptions.
- Some Medicare Part D plans are included in Medicare Advantage plans.
Choosing the right Medicare plan is important. With different coverage options, copays, premiums, and deductibles, it can be frustrating to figure out your best option.
Medicare is the government-funded health insurance plan for people age 65 and older in the United States. It has several parts that cover different types of health and medical costs.
In this article, we’ll go over the prescription drug portion of Medicare coverage, known as Part D.
Medicare Part D is also known as Medicare’s prescription drug coverage. It helps pay for medications not covered under parts A or B.
Even though the federal government pays 75 percent of medication costs for Part D, covered individuals still have to pay premiums, copays, and deductibles.
Coverage and rates can vary based on the plan you choose. It’s important to check all the options before choosing a Medicare Part D plan.
All Part D plans must cover at least two and often many more medications from the most prescribed medication classes and categories. These include:
- HIV medications
- cancer treatment medications
Most plans also cover the majority of vaccines with no copay.
A Part D plan can change the medications or pricing on their coverage list at any time for several reasons, such as:
- a generic of a brand becomes available
- the price of brand may change if a generic becomes available
- a new medication has become available or there’s new data about this treatment or medication
Beginning January 1, 2021, if you take insulin, your insulin could cost $35 or less for a 30-day supply. Use Medicare’s find a plan tool to compare Medicare Part D plans and insulin costs in your state. You can enroll in a Part D plan during open enrollment (October 15 through December 7).
Prescription drugs not covered by Medicare Part D
Over-the-counter medications generally aren’t covered by Part D plans, which includes:
- cosmetic and weight loss medications
Prescription drugs not covered by Medicare Part D include:
- fertility drugs
- medications used to treat anorexia or other weight loss or gain when these conditions aren’t part of another diagnosis
- medications prescribed solely for cosmetic purposes or hair growth
- medications prescribed for the relief of cold or cough symptoms when these symptoms aren’t a part of another diagnosis
- medications used to treat erectile dysfunction
If you’re eligible for Medicare, you’re eligible for Part D. To be eligible for Medicare, you must:
- be at least 65 years old
- have received Social Security disability payments for at least 2 years, although this waiting period is waived if you receive a diagnosis of amyotrophic lateral sclerosis (ALS) and will be eligible the first month you receive a disability payment
- have received a diagnosis of end-stage renal disease (ESRD) or kidney failure and need to have dialysis or a kidney transplant
- be under age 20 with ESRD and have at least one parent eligible for Social Security benefits
The timing of your plan enrollment depends on:
- first time enrollment when you turn age 65 (from 3 months before until 3 months after you turn age 65)
- if you’re eligible before age 65 due to disability
- open enrollment period (October 15 to December 7)
- general enrollment period (January 1 to March 31)
You might be able to join, leave, or switch plans if you:
- move into a nursing home or skilled nursing facility
- relocate out of your plan’s coverage area
- lose medication coverage
- your plan doesn’t offer Part D services
- you want to switch to a plan with a higher star rating
You can also change plans during open enrollment each year.
How to enroll in Medicare Part D
You can enroll in a Medicare Part D plan during initial enrollment for Medicare parts A and B.
If your prescription drug plan isn’t meeting your needs, you can change your Medicare Part D option during open enrollment periods. These open enrollment periods happen twice throughout the year.
Costs depend on the plan you choose, coverage, and out-of-pocket costs. Other factors that affect what you may pay include:
- your location and plans available in your area
- type of coverage you want
- coverage gaps also called the “donut hole“
- your income, which can determine your premium
Costs also depend on medications and plan levels or “tiers.” The cost of your medications will depend on which level your medications fall under. The lower the level, and if they’re generic, the lower the copay and cost.
Here are a few examples of estimated monthly premium costs for Medicare Part D coverage:
- New York, NY: $7.50–$94.80
- Atlanta, GA: $7.30–$94.20
- Dallas, TX: $7.30–$154.70
- Des Moines, IA: $7.30–$104.70
- Los Angeles, CA: $7.20–$130.40
Your specific costs will depend on where you live, the plan you choose, and the prescription medications you’re taking.
The donut hole is a coverage gap that begins after you pass the initial coverage limit of your Part D plan. Your deductibles and copayments count toward this coverage limit, as does what Medicare pays. In 2021, the initial coverage limit is $4,130.
The federal government has been working to eliminate this gap and, according to Medicare, you’ll only pay 25 percent of the cost of covered medications when you’re in the coverage gap in 2021.
There’s also a 70 percent discount on brand-name medications while you’re in the donut hole to help offset costs.
Once your out-of-pocket expenses reached a certain amount, $6,550 in 2021, you qualify for catastrophic coverage. After this, you will only pay a 5 percent copay for your prescription medications for the rest of the year.
Here are a few points to remember when choosing a plan:
- Rules for switching plans. You can only switch drug plans during certain times and under certain conditions.
- Options for veterans. If you’re a veteran, TRICARE is the VA plan and is generally more cost-effective than a Medicare Part D plan.
- Employer-based prescription plans. Check to see what’s covered by your employer’s healthcare plans to determine out-of-pocket costs compared with a Part D plan.
- Medicare Advantage plans (MA). Some Health Maintenance Organizations (HMOs) or Preferred Provider Organizations (PPOs) Medicare Advantage plans cover costs for parts A, B, and D, and they may also pay for dental and vision care. Remember, you’ll still have to enroll in parts A and B.
- Premiums and out-of-pocket costs can vary. You can compare plans to see which offers you the best coverage for your specific medication and healthcare needs. Medicare Advantage plans might have network doctors and pharmacies. Check to make sure your healthcare providers are on the plan.
- Medigap plans. Medigap (Medicare supplemental insurance) plans help pay for out-of-pocket costs. If you bought your plan before January 1, 2006, you might have prescription medication coverage, too. After this date, Medigap didn’t offer medication coverage.
- Medicaid. If you have Medicaid, when you become eligible for Medicare, you’ll be switched to a Part D plan to pay for your medications.
Questions to ask
When deciding on a Part D plan, keep these points in mind:
- Are the medications I’m currently taking covered?
- What is the monthly cost of my medications on the plan?
- How much do medications that not covered on the plan cost?
- What are the out-of-pocket costs: copay, premium, and deductibles?
- Does the plan offer extra coverage for any high-cost drugs?
- Are there any coverage limits that might affect me?
- Do I have a choice of pharmacies?
- What if I live in more than one place during the year?
- Does the plan offer multistate coverage?
- Is there a mail-order option?
- What is the plan’s rating?
- Is there customer service with the plan?
Medicare Part D is an important part of Medicare benefits. Choosing the right plan can help keep costs in check.
Once you choose a plan, you must stay in it until the next open enrollment period which starts on October 15. It’s important to choose a good plan that works for your needs.
To choose the best plan for your medication needs, review your costs and options carefully. Work with a helper to choose the best option even in deciding to switch plans.